since Kronos.io is now in alpha/beta testing and we're about to see what this is all about, I'd like to collect some informations about that new offering. I'm aware that the site isn't officially launched yet, and I take it that we'll get more accurate information in the near future. Anyway, I think its time to start collecting questions to clarify, so that we, as a community, are able to judge that new site.
The site is announced to offer a better security level then Bitcoinica -- this is highly appreciated. We'll know for real how resilient this website is actually, after it has been hacked for the first time. Thus, not much to add on that topic for now ;-)Indeed, for the moment I'm far more interested in understanding the financial construction and the business model.
Judging from what is accessible now for beta testers, the site is pretty much a clone of Bitcoinica. Thus, for starters, it's also a contract for difference
business. When compared with Bitcoinica, I noticed two differences.
accounting seems to be done in BTC solely (Yay!)
- while the offered leverage options are the same, the account size limits are a bit more conservative (400 BTC on 5:1 and 200 BTC on 10:1)
Based just on these observations, I'd like to pose the following questions.
- how does Kronos.io get its liquidity?
- especially how does it get the USD for going long on leverage?
- what mechanisms are in place to prevent customers from opening positions which aren't sufficiently backed by available liquidity?
- what mechanisms are in place to protect the business from collapsing when the market moves too fast while force liquidating positions?
- opening a position corresponds to -- exactly what?
- is there an 1:1 relation, i.e every position corresponds to a trade made on some exchange
- or does the site do a netting of all open positions and just trades the difference/excess on some exchange
- or is there an internal buffer to work against, and actual trades will happen only when this buffer is exceeded
- or are all positions just virtual and the site is thus speculating against its own users? (hopefully not)
- the displayed rates are connected to what exchange? (probably Mt.Gox?). How tight is that connection? How closely do those rates follow the exchange rates? How frequently are they updated?
- since the margin seems to be calculated in BTC (is that correct?), I'd expect this tradeable margin to be independent from the current exchange rate. So you can't be zhoutonged just by a decreasing BTC rate, correct?
- what values and properties are automatically and dynamically adjusted?
- the spread, or even premium added on top of the current spread at the backing exchange?
- interest rates? (where are they accessible?)